How Does an Irrevocable Life Insurance Trust Work?

July 27, 2017

The steps to successfully establishing an ILIT include the following: Your advisors, including your attorney, help to design and create the ILIT. The trustee of the ILIT applies for an insurance policy on your life, or the lives of you and your spouse. You make a gift of the premium amount to the ILIT. The… Read more »

I Thought My Insurance Agent Told Me That Insurance Proceeds are Tax-Free. Did I Miss Something?

July 25, 2017

Life insurance is NOT always tax-free. One of the most common misconceptions about life insurance has to do with its tax status. In virtually all circumstances life insurance is income tax free. The premiums were paid with after-tax dollars and the death benefit is not subject to income tax. However, life insurance is not necessarily… Read more »

What is an Irrevocable Life Insurance Trust?

July 21, 2017

An Irrevocable Life Insurance Trust (“ILIT”) is probably the most frequently used type of irrevocable trust. It’s an irrevocable trust that you can establish to own a life insurance policy on your life. If you personally own a life insurance policy, the policy proceeds will be includable in your taxable estate and subject to estate… Read more »

Are Irrevocable Trusts Somehow More “Powerful” Than Revocable Trusts?

July 19, 2017

In general, the only way to obtain tax advantages using a trust is to give up ownership. Irrevocable Trusts require you to give up legal title (ownership) to any property and that can never be changed. Revocable trusts, on the other hand, do not require giving up ownership and may be changed. But, there are… Read more »

What is an Irrevocable Trust?

July 17, 2017

An irrevocable trust is a trust that may not be altered, amended or revoked by the creator of the trust. The reason you may consider creating an irrevocable trust is because all gifts you make to the trust are treated like gifts made to a “third party,” which means the gifts are excluded from your… Read more »

I Don’t Need the Money From My Father, and I’d Like to Pass it to My Children Instead, Without Any Adverse Tax Consequences. Is That When a Disclaimer Might be Used?

June 26, 2017

Yes. A qualified disclaimer could be the perfect tool to accomplish this goal. If you disclaim your interest in the inheritance after your father is deceased, but before you accept any benefit from the inheritance, the inheritance will pass as though you predeceased your father. In that case we would look to the terms of… Read more »

What is a Disclaimer?

June 22, 2017

A disclaimer is an irrevocable refusal to accept an interest in property. In other words, it is the legal way of saying “no thank you.” The effect of a disclaimer is that the disclaimed property will be treated as if it had never been transferred to the person making the disclaimer. Most states have statutes… Read more »

How is My Personal Property Handled in a Trust?

June 20, 2017

Personal property such as jewelry, antiques, artwork, family heirlooms, and household effects can be passed on to your beneficiaries through a specific bequest: “I leave my Ming Vase to my sister Betty.” But for most people, it would be overwhelming to try to inventory and choose a beneficiary for every last item you own. Instead,… Read more »

What is a Community Property Agreement and How Does it Interact with My Trust?

June 16, 2017

If you live in one of the ten community property states, your state law may allow for a community property agreement. This is an agreement between spouses that acknowledges that all assets are community property. In addition, it stipulates that in the event of the death of one of the spouses, all of the assets… Read more »

My Husband Did Not Have a Revocable Living Trust.

June 14, 2017

He only had a will and there were no big problems when he passed away, so why do I need a revocable living trust? This specific situation would need to be reviewed by your professional advisors, of course, but one reason you may have experienced no problems is because you and your husband owned everything… Read more »